Home Administration Presidency prepares rules for Eletrobras’ privatization

Presidency prepares rules for Eletrobras’ privatization

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The Ministry of Mines and Energy shall submit to the Presidency of the Republic, in the first week of November, a proposal for a Provisional Measure that will establish the rules for the privatization of Eletrobras. The government estimates that it will raise about R $ 15 billion with the measure.

Summary

Centrais Elétricas Brasileiras SA (Eletrobras) is a mixed-capital company controlled by the Brazilian government, constituted by Law no. 3,890-A, of April 25, 1961. Since its creation, Eletrobras has contributed to the expansion of energy supply Development of the country.
Currently, the company operates directly in the control of 13 subsidiaries of generation, transmission and distribution of electricity, a research center (Eletrobras CEPEL) and a holding company (Eletrobras Eletropar). In addition, it owns half of the capital stock of Itaipu Binacional and holds interests in more than 170 Special Purpose Companies (SPE) and in 26 companies.

 

The following are some figures illustrating the size and importance of the company:

 

Contributors: 24,539
Power generation capacity: 46,856 GW
233 generating plants, consisting of:
Hydraulic Power Plants: 47
Thermoelectric Plants: 114
Wind Power Plants: 69
Solar Power Plant: 01
63,387 Km Transmission Lines in the National Interconnected System (SIN)
Estimated market value: 19.5 billion
Share of the Union: common shares: 51%
Union participation in total capital: 40.98%

 

With a view to making the company more operational, competitive and agile, the Ministry of Mines and Energy (MME) presented to the Council of the Investment Partnerships Program (CPPI) a proposal to implement privatization measures aimed at reducing the Union’s share In its share capital. This movement will allow Eletrobrás to improve its governance model, as well as improve transparency in the management process.
The implementation of the privatization process by the Federal Government will take into account the following guidelines: (i) maximization of the financial return to the Union; (Ii) meeting the highest corporate governance requirements of the capital market; (Iii) limiting the voting power of the shareholders with the largest shareholding, in order to guarantee the democratization of capital in the control of the company; (Iv) reduction of electric energy sector charges, with a priority target for the costing of the Social Energy Tariff; and (v) commercialization of electricity under an independent production regime.
The effectiveness of the proposal will depend on the evaluation of the necessary legal, regulatory and governmental authorizations, on the evaluation of the model to be adopted and on the observance of specific procedures deriving from its nature as a publicly-traded mixed economy company with shares listed on BM & FBovespa, New York Stock Exchange (NYSE) and the Madrid Stock Exchange (Latibex).